Turkish government shepherds public toward sustainable impoverishment

As the economic strain of the coronavirus continues to mount, authoritarian and developing states in particular have come under growing strain.

Turkey, which fits both of these categories, is worthy of close attention. We find two stable dynamics in the country that remain linked even as their pace relative to one another changes: the worsening of the economic situation, and the heightening authoritarianism of the regime.

What is worse now is that, with the effect of the coronavirus, the international economic situation is also worsening. In other words, countries that have their own savings will not be willing to transfer funds to foreign states.

Turkey has two major concerns from this outlook. The first is the broad scale problem of righting its troubled economy. The second is the more immediate problem of securing cheap foreign currency sources to meet its current needs.

There is a third large problem to add to these, which is not by nature an issue of the economy but whose results certainly have an economic impact: The masses in Turkey who are propping up the state and who soak up the state’s propaganda are almost entirely disconnected from reality.

The first problem, at least in the short term, is hopeless: It is not possible for Turkey’s economy to recover any time soon. The coronavirus has certainly exacerbated the situation, but Turkey’s economy has seen structural degradation and slides in stability for the past 10 years.

By structural degradation, I am referring to the complete erosion of the norms and institutions that are a prerequisite for a functioning market economy. They have been turfed out in favour of a kind of arbitrary statism. The rules of this new game are as follows: Market actors and, ultimately, the public will foot the bill without complaint about the state’s arbitrariness.

Large amounts of money have been frittered away for political aims. The government has built airports where no planes take off and bridges that no cars will cross. The economy became an extension of day-to-day politics.

Why did they make such huge mistakes on the macro level? Waste and poor management doubtless played a role. But many people often miss another critical point in this matter: The primary paradigm for those governing Turkey is Islamism, and these actors’ approach to running the economy is governed by Islamist-statist propositions.

The difference between these propositions and the normal rules of a functioning market is that they are built far more around norms than dynamics. These actors believe that if norms are imposed, regardless of the dynamics, this will secure economic recovery. There are great differences between the Islamist-statist outlook and the market outlook on topics like employment, interest and investment.

This is why, for more than five years now, we have been watching the reflections of Islamist-statism in Turkey. The state’s power over the economy has been on a constant rise, while independent and autonomous structures are disappearing.

Since authoritarianism has occurred concurrently, the increasing influence of the Islamist mentality on the economic field has escaped notice.

As for the second macro problem – Turkey’s currency – the situation is just as complex on this front. As the lira’s value per dollar plunges, inflation is driven up, and this places pressure on many other factors, notably interest rates.

With confidence in the economy weakening and the need for sources of dollars rising at the same time, the state is heading straight toward an impasse.

So, the government is employing all kinds of regulatory contortions to try to keep economic actors in line. You could well call its recent economic decisions a form of hybrid capital controls.

All of this is predicated on the optimistic assumption that the situation will ease off and things will get back on track. But what if it does not – what if the crisis draws out even longer?

The answer is simple: If the international situation does not improve, and the domestic economic situation is not put right, the government will be forced to look where it can for funds.

Today the funds are coming from the public’s belongings and savings. It would be naïve to think the government does not have its eye on these sources.

However, the government will not take such drastic steps and seizing people’s savings outright; it has shrewder ways to gain access to them, anyway. In the end, it is the government that sets the rules of the economic game, so it can find a way to squeeze the public of its savings in short order.

What the ruling party wants today is to meet the situation with a kind of sustainable impoverishment, by persuading the public to accept that its conditions will worsen during the pandemic for the good of the state.

The conjuncture that is bringing the pandemic-stricken world to an economic crisis will be of use to the ruling party as it tries to spin this rhetoric. It will frame the coronavirus as hitting the Turkish nation at the moment when it was ready to advance to great things, and it will blame the pandemic’s spread through Turkey on Western countries that it says failed to take the appropriate precautions.

A certain segment of the public will unquestioningly take the bait. This is the segment that has nothing to ask of the treasury and finance minister, even while the lira has slumped to a two-year record low of nearly seven per dollar.

The government’s real problem is thus with market actors and citizens who have savings. It expects these groups to be prepared to sacrifice their economic holdings in line with the government’s policies, in other words, for large swathes of the population to agree to become poorer together and sacrifice their own cash for the political power.

As the crisis deepens, the state will expect workers and producers to bear its full weight. We will see the public sacrifice itself for the state, and those who do not accept the sacrifice will find themselves denounced as traitors.

 

© Ahval English

The views expressed in this column are the author’s and do not necessarily reflect those of Ahval.

The opinions expressed in this column are those of the author and do not necessarily reflect those of Ahval.